Company News Feature

Johnson & Johnson Posts 1.6% First Quarter Sales Increase

Tracey Romero • Tue, April 25th, 2017

Johnson & Johnson announced on Tuesday April 18, 2017 that sales for the first quarter 2017 rose 1.6% (excluding currency and acquisitions). Sales for the quarter were $17.78 billion, which is up from $17.482 billion reported in the first quarter of 2016.

Johnson & Johnson, which is headquartered in New Brunswick, New Jersey, is a multinational medical device, pharmaceutical and consumer packaged goods manufacturer. The following table shows the sales details for first quarter 2017.

Source: Johnson & Johnson company documents

According to a company press release, the company has included the estimated impact of the Actelion transaction which is expected to close in the second quarter in its financial guidance.

"Johnson & Johnson's first-quarter results are in line with our expectations and we are confident we will achieve the full-year financial guidance we established at the beginning of the year," said Alex Gorsky, chairman and chief executive officer in a press release.

"The pending acquisition of Actelion demonstrates our ongoing commitment to bringing innovation to patients with significant unmet needs, and provides a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products. We look forward to the associates from Actelion joining the Johnson & Johnson Family of Companies."

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Biomet Reports Profits and Acquires Lanx

Walter Eisner • Wed, October 9th, 2013

Biomet, Inc. reported making a profit in the last quarter and doubled down on the spine business.

The day after announcing the $147 million acquisition of Lanx, Inc., the company reported a 3.3% increase in 2014 first quarter revenue to $730.7 million. Excluding currency, net sales increased 4.3%. Net income was $31.1 million versus a $31.5 million loss in the previous year's first quarter. The company also reported paying $5 million for the medical device tax during the quarter and $6 million for litigation. Net debt increased slightly for the previous quarter to $5.62 billion.

Binder: “A Great Start”

Jeff Binder, Biomet's president and CEO, said on October 8, 2013, that the company had a great start to their fiscal year. He cited an uptick in first quarter hip and knee sales with worldwide constant currency growth at 4% and 5%, respectively, despite having one less selling day in the quarter. "Our sports, extremities and trauma (S.E.T.) sales remained strong during the quarter with double digit growth worldwide. And, we started this week on a high note with yesterday’s press release announcing the signing of a definitive agreement to acquire Lanx, Inc., a leader in minimally invasive spine technologies."

On a reported basis, knees and hips were up 3.5% and 1.9%, respectively. S.E.T. sales climbed 17.4%. Spine, however, declined by 6.6%.

Lanx, Inc.

Adam Johnson, president of Biomet Spine, Bone Healing & Microfixation, said the agreement to acquire Lanx is "a key step in the fulfillment of our strategic plan. The resulting increase in scale, expansion of our product portfolio and infusion of talent will accelerate our efforts to be the partner of choice in spine for distributor partners, hospitals and the spine surgeons we serve.”

Wells Fargo analyst Larry Biegelsen estimates that Lanx likely has between $80 million to $100 million in annual sales. "We estimate that Biomet had worldwide spine sales of approximately $160 million during fiscal 2013 (ended May) which represents close to 2% market share. We believe the combined company will have about 3% share of the $9 billion worldwide spine market."

DePuy Synthes’ First Quarter, Steady and Robot Deal With Google

Walter Eisner • Fri, April 17th, 2015

Johnson & Johnson's (J&J) DePuy Synthes' reported revenue of $2.33 billion was down 3.8% in the first quarter of 2015. Excluding the 5.9% negative currency impact of a strong dollar, sales were up 2.1%.

Utilization Rates, Insured, Up

Company executives told analysts on April 14, 2015, that they saw a third consecutive quarter of sequential and year-over-year improvement in hospital utilization rates and are encouraged by the signs that the company is seeing in U.S. volumes. The government recently reported that about nine out of ten Americans now have health insurance.

Growing Sales

On a constant currency basis, hips were up 3% (2% in U.S.), knees up 1% (2% in U.S.) spine down 2% (down 4% in U.S.) and trauma up 3% (flat in U.S.).

The company acknowledged losing spine share in the quarter to smaller players. Trauma growth was driven by 7% growth outside the U.S. due to strong volume growth including a tender. Hip growth of 3% was driven by strong volume growth partially offset by continued pricing pressure. Primary stem platform sales were a major contributor to the results.

The increase in knee sales was due to strong sales of Attune. Outside the U.S. knees were down 1% with growth in Asia Pacific and Latin America offset by lower sales in Europe. Slowing elective procedure volume primarily in the U.K contributed to the soft sales in Europe.

J&J, Google and Robots

There was interesting robotic news from J&J during the quarter with the announcement in March of a definitive agreement to collaborate with Google Life Sciences to advance development of a surgical robotics program. J&J’s CFO Dominic Caruso said the company would expect this collaboration would take "a couple" of years to come to the market with the new type of robotic surgery that they think will "dramatically revolutionize surgery."

DePuy Synthes Third Quarter Needs a Band-Aid

Walter Eisner • Thu, October 15th, 2015

DePuy Synthes’ third quarter revenue of $2.181 billion declined 0.7% from last year's third quarter. If you include the negative 7% impact of a strong dollar, reported revenue declined by a whopping 7%.

Knees did okay in the U.S., rising 2% due to strong sales of the Attune knee system. Worldwide, knee sales were flat. In hips, revenue climbed 3% in the U.S., driven by the company's primary stem platform and sales worldwide, rose 2%. Overall, trauma was flat, but climbed 5% in the U.S. due to new products.

Pruden Explains

Gary Pruden, Johnson & Johnson's new Worldwide Chairman Medical Devices (and parent of DePuy Synthes) said the company has seen mixed results in trauma's performance. "This has been an important area of focus since acquisition. However we have seen a lower level of innovation though due to a number of factors including the significant remediation effort to bring some of these up to Johnson & Johnson quality standards and the overall integration efforts during the last few years."

Going forward, he said the company will focus resources to deliver "new innovative products and target faster growing categories within the market such as elective foot and ankle. The recent success of our new Femoral Nail System TFN Advanced demonstrates receptivity in this category to new and meaningful innovation."

Dismal Spine

Spine was dismal, dropping 6% worldwide, but staying flat in the U.S. The company attributed the weak spine results to "competitive challenges." BMO Capital Market analyst Joanne Wuensch said it appears that continued JNJ/Synthes integration may benefit some of the smaller spine market competitors.

Company officials told analysts on October 13, 2015 that sales contributors to the U.S. growth were strong double-digit sales of Orthovisc and Monovisc.

Weakened China

The results outside the U.S. were negatively impacted by softer demand and a reduction in inventory levels, primarily in China, said the company.

In orthopedics, Pruden said the company is prioritizing its knees and trauma platforms. He expects the knee market to grow at 3.8% CAGR to around $9 billion over the next six years.

Walter Eisner • Wed, October 15th, 2014

The company cut hip prices by 5% during the quarter but still logged a 4% increase in hip sales. Knee sales jumped 6% and trauma sales rose 3%. Only spine sales showed a decline, dropping 1%. Chief Financial Officer Dominic Caruso told analysts on an October 14 conference call that the company cut hip prices as it attempted to renew contracts with hospitals and other customers.

Sales growth, according to the company, was driven by trauma, sports medicine, knees and hips. Trauma's increase was due to market growth and new product launches, while the launch of Monovisc, coupled with the continued strong growth for Orthovisc drove results for sports medicine.

Hip sales were driven by strong volume growth, partially offset by continued pricing pressure. Primary stem platform sales were major contributors to the results. The company attributed the increase in knee sales to the launch of Attune, partially offset by pricing pressure across the regions.

Caruso told analysts the industry has now seen two consecutive quarters of positive momentum in hospital utilization rates, which is in line with recently published analysts’ reports noting the strength. "We continued to remain confident that as economies recover and as healthcare reform continues to gain momentum here in the U.S. and abroad, utilization rates are going to increase."

A New Seasonality

Analysts asked Caruso what the company expected to see on the U.S side in terms of hip and knee volumes after a soft first half of the year.

"We did see increased volume in the third quarter, " said Caruso. He said this was consistent with what the company expected in that the second half of the year would be stronger than the first half of the year. He added that the company experienced 70% of its hip and knee growth in the fourth quarter.

"So obviously, we've now seen a new seasonality that’s very clear in the hip and knee market.

DePuy Ends Year With a Bang, Synthes With a Whimper

Robin Young • Mon, January 25th, 2016

Johnson and Johnson’s DePuy Synthes business ended 2015 on a clear upswing, if we’re looking at large joint reconstruction, but a slog if we’re talking trauma and spine.

For the final quarter of 2015, DePuy Synthes sold nearly $760 million of hip and knee implants, instruments and other related products—which was about 1% higher than the $751 million sold at the end of 2014.

But, of course, those numbers are in U.S. dollars. Most of these sales were in other currencies. Adjusting for currency effects and, impressively, hip/knee revenues rose about 6%. Which means that DePuy ended 2015 with a bang.

Spine and trauma…more difficult.

For the last quarter of the year, DePuy Synthes sold about $1.7 billion of spine and trauma products which was about 1% lower than the same quarter in 2014.

Again, those are U.S. dollars, so adjusting for currency effects, and the growth rates were actually up about 4%.

United States Sales Pulled up Rest of the World

U.S. demand for DePuy Synthes orthopedic products was extraordinary. No doubt helped by rising employment (and therefore insurance coverage) and the 11 million newly enrolled Obamacare beneficiaries, DePuy Synthes packed up, shipped and billed for 9.8% more hips, 7.6% more knees, 6.3% more spine and 7.7% more trauma products in the last quarter as compared to the fourth quarter of 2014.

Overall, the U.S. booked an impressive 7.4% sales growth while OUS sales fell by 10.6%.

Coming on the heels of Stryker’s strong finish to 2015, DePuy Synthes’ numbers are signaling that the orthopedic industry is both thriving and growing sales at an increasing rate. Despite the gloom and doom on Wall Street, orthopedics is very healthy and delivering excellent sales growth and operating profit margins.

Wall Street’s Take

Wells Fargo: “In our view, management’s overall tone was very positive, expressing confidence in the growth outlook of the end-markets and JNJ’s ability to outpace the market growth.